When an Investor Owns More Than 50% of the Common

question 50

Multiple Choice

When an investor owns more than 50% of the common shares of another company,

• A)consolidated financial statements are usually prepared.
• B)the fair value through profit or loss model is used.
• C)the investor is called a subsidiary.
• D)the investor recognizes income only when dividends are received.

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Definitions:

Cash Inflows

Money or other assets that come into a company or economy, often from sales, investments, financing, and other sources.

Cash Payback Period

The duration required for an investment to generate cash flows sufficient to recover the initial outlay or cost.

Net Income

A company's earnings that remain after subtracting all expenses and taxes from total revenue.

Expenditure

Money spent or cost incurred in an organization's efforts to generate revenue, representing the consumption of goods and services.